Liu Liange – chairman of the board of directors of the Bank of China (BOC) until March – is the best-known manager currently under investigation by the CCP's disciplinary commission. © Yang Guanyu/IMAGO
The party's disciplinary commission has targeted several of the country's top bankers in recent weeks. Foreign investors are reacting nervously. Is the leadership concerned with stability or ideology?
This article is IPPEN. MEDIA in the course of a cooperation with the Europe.Table Professional Briefing – first published by Europe.Table on 04 May 2023.
China's financial sector is in a state of alarm. The government has recently targeted several top managers of banks and other institutions. Beijing's enforcer is the dreaded Communist Party Central Disciplinary Commission (CCDI). It has launched a campaign to "resolutely" combat misconduct in the industry.
According to CCDI, a record number of inspections were recently initiated at more than 30 state-owned corporations in sectors such as finance, defense and energy. First of all, it is about the financial institutions. Chinese state media reported that investigations had been launched against eight senior managers of state-owned banks in March alone against the backdrop of an "intensified anti-corruption campaign." According to the Financial Times, more than a dozen managers have been investigated or punished since February.
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More penalties than ever before
Of course, the fight against corruption is not new under President Xi Jinping. For years, the authorities have repeatedly imposed harsh penalties on high-ranking government officials and managers. But there have never been so many in such a short time in the banking sector.
The most well-known manager against whom the CCDI is now investigating is Liu Liange. The 61-year-old was chairman of the board of the Bank of China (BOC) until March. The CCDI is also investigating Wang Jianhong, the former head of the Beijing BOC branch. In addition, Zhao Zhiran, who was previously responsible for the China Construction Bank in Shenzhen, has been targeted by the authorities. Li Li, the former president of the Export-Import Bank of China, has already been indicted. He is accused of accepting bribes.
Investors are becoming skeptical
The disappearance of Bao Fan also caused a stir in February. The Chinese billionaire and head of the Hong Kong stock exchange-listed financial company Renaissance has not resurfaced to this day. Bao Fan's family had been informed that the 53-year-old was involved in an investigation, Bloomberg reported.
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Industry insiders suspect that Bao's disappearance is related to the problems of another Renaissance manager named Cong Lin. He was arrested in September. He is being investigated in connection with his previous work for the financial leasing arm of the state-owned Industrial and Commercial Bank (ICBC), the Chinese business magazine Caixin reported.
Foreign investors are keeping a very close eye on what is happening in China's financial sector. They have just taken note with great relief that the two-year regulatory crackdown against the technology sector has ended. In general, there is great hope that Beijing will finally loosen the reins after the Corona opening and give preference to pragmatism.
Rich and private sector unsettled
The state-run Global Times, for example, argues that the current crackdown is necessary to avoid financial risks, as was recently the case with US regional banks. However, there is also a lot of ideology involved. Thus, the disciplinary commission criticizes the "hedonism" and inappropriate "luxurious lifestyle" of the industry. A choice of words that is reminiscent of Xi Jinping's "general prosperity".
This slogan, which aims at a fairer redistribution of wealth, was used four times by the president at the party congress last fall, causing great uncertainty among rich Chinese and in the private sector. Even then, many Chinese banks reacted with salary and bonus cuts for their top managers.
